This is defined as money facilities borrowed to be paid at a later date.


Instruments of credit are written or printed financial documents that serve either as promises to pay or orders to pay an entity named on the document.

Examples of instruments of credit in an economy;

  • Promising note. This is a written promise by the buyer to the seller to make a specific payment at a future date.
  • Bill of exchange.
  • Credit card. This is used by the holder to buy goods and services from organizations that accept payment by this method.
  • Bank notes.
  • Cheque. Is a written order by the account holder to the bank to pay a specified amount of money to the person named on the cheque or his order.
  • Letter of credit.

  • Treasury bills and bonds.
  • Bank draft. This is the cheque drawn on the bank itself and the bank issues it only if the person requesting it has paid an equivalent amount of money to the bank.
  • Credit transfer system. This is a service offered by a commercial bank for settling many debts using one cheque.
  • Standing order. This is an instruction to the bank by the account holder to pay a specified sum of money to a named person at a regular or specified interval for a specified period of time.
  • Direct debit scheme. This is similar to a standing order but instead of asking the bank to make payment on one’s behalf, the account holder gives an organization or an individual permission to withdraw money directly from the lender.
  • Travelers’ cheque.


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